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Good day Mr. John Moffat i came across a crazy question from the Bpp which i don’t understand to some extent. i really wanted to over look it but can’t predict the examiners
Donna Co acquired 80% of the equity share capital of Blitsen Co. on 1 January 20X4 when the retained earnings of Blitsen Co
were $40,000. the fair value of the non-controlling interest at this date was $25,000. at December 20X4, the equity capital of Blitsen Co where as follows :share capital $40,000
share premium $10,000
retained earnings $60,000during the year Blitsen Co sold to Donna Co for $20,000. this price includes a mark up $12,000 for profit. At 31 December 20X4 , 50% of these goods remained unsold in the inventory of Donna CO.
What is the value of the non-control interest in the Donna group at 31 December 20X4, for the purpose of preparing the consolidated statement of financial position ?
A $20,800
B $27,800
C $26,600
D $29,000My major problem is on how to get the UNSOLD inventory figure and the PUP, Mark-up % ?
50% of the goods remained in inventory, and so the full price of them is 10,000.
Since the total of 20,000 includes profit of 12,000, then the unrealised profit in the 50% left in inventory must be 50% of 12,000 = 6,000.
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